01—Abstract
Summary
Summary of the 10-K filed February 22, 2017. Cited figures are marked; the original filing is the authoritative source.
ExxonMobil Corporation's 2016 Form 10-K highlights a challenging year marked by lower commodity prices, which impacted the Upstream segment significantly.
Despite a substantial impairment charge related to U.S. natural gas assets, the company maintained a strong financial position, supported by disciplined capital allocation and its integrated business model. The Downstream and Chemical segments provided resilient performance, partially offsetting the Upstream's decline.
The company continued strategic investments in growth projects, particularly in areas like the Permian Basin and global LNG infrastructure, anticipating long-term energy demand growth. ExxonMobil's focus remains on operational efficiency, cost management, and technological advancement to navigate the evolving energy landscape.
02—Key points
Key Highlights
- Significant decline in Upstream earnings due to lower commodity prices, compounded by a $2 billion impairment charge on U.S. natural gas assets.
- Downstream and Chemical segments demonstrated resilience, with Downstream earnings of $4.2 billion and Chemical earnings of $4.6 billion, though margins softened.
- Capital and exploration expenditures decreased to $19.3 billion in 2016, down from $31.1 billion in 2015, reflecting a more selective investment approach.
- Proved oil and natural gas reserves were impacted by low 2016 prices, with 3.5 billion barrels of bitumen at Kearl and 0.8 billion barrels of oil equivalent in North America no longer qualifying as proved reserves under SEC definitions.
- The company continued to manage its operations effectively, with a focus on cost control and operational efficiencies across all segments.
- Long-term strategic investments continued in key growth areas, including the Permian Basin and global LNG projects, underscoring confidence in future energy demand.
- ExxonMobil maintained a strong financial position and liquidity, with unused committed lines of credit totaling $5.8 billion at year-end 2016.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2016filed February 22, 2017Financial Statements
FY2016 against FY2015
| Line item | FY2016FY2015 | Change |
|---|---|---|
| Revenue | $200.63B$239.85B | −16.4% |
| R&D Expenses | $1.06B$1.01B | +5.0% |
| SG&A Expenses | $10.44B$11.50B | −9.2% |
| Operating Expenses | $200.15B$227.28B | −11.9% |
| Interest Expense | $453.00M$311.00M | +45.7% |
| Net Income | $7.84B$16.15B | −51.5% |
| EPS (Basic) | $1.88$3.85 | −51.2% |
| EPS (Diluted) | $1.88$3.85 | −51.2% |
| Shares Outstanding (Basic) | 4.18B4.20B | −0.5% |
05—Questions
Frequently Asked Questions
What was the primary driver of ExxonMobil's reduced earnings in 2016 compared to previous years?
The primary driver for the significant reduction in earnings in 2016 was the substantial decrease in commodity prices for crude oil and natural gas. This directly impacted the Upstream segment's profitability and led to a $2 billion impairment charge on certain U.S. natural gas assets.
How did the decline in commodity prices affect ExxonMobil's proved reserves?
The lower commodity prices in 2016 caused a portion of previously booked proved reserves to no longer qualify under SEC definitions. Specifically, the company reported that 3.5 billion barrels of bitumen at its Kearl operation and 0.8 billion barrels of oil equivalent elsewhere in North America no longer met the economic criteria for proved reserves.
What is ExxonMobil's outlook for energy demand and its strategy to meet it?
ExxonMobil projects a continued rise in global energy demand, driven by population and economic growth, particularly in developing countries. The company anticipates that oil will remain the largest energy source, with natural gas growing fastest. Its strategy involves disciplined investments in attractive, long-term projects, leveraging its integrated business model, technological capabilities, and operational efficiency to meet this demand.
How did ExxonMobil manage its capital expenditures in 2016?
Capital and exploration expenditures were reduced to $19.3 billion in 2016 from $31.1 billion in 2015. This reduction reflects a more disciplined approach to capital allocation, with key project start-ups and a focus on capital efficiencies. The company plans to increase investment to $22 billion in 2017, supporting strategic growth initiatives.
06—Continue